Licensed moneylenders have a bad reputation because of their debt collection practices. However, their actions are regulated by MinLaw. They also follow a strict set of rules and stipulations when it comes to lending money.
Banks take a long time to approve loans, while licensed moneylenders can provide the funds you need quickly. This makes them a viable alternative to traditional banks.
They offer short-term loans
Licensed moneylenders offer short-term loans to borrowers for various purposes. They require some form of collateral – such as property or vehicle – in case the loan is not repaid on time. In addition, they may impose late fees and interest charges on the unpaid amount.
A good licensed moneylender will always explain all the loan terms clearly to a borrower. Moreover, they will not ask for any upfront fees for their services. They also require that a borrower attends a face-to-face meeting before granting the loan. They also prohibit advertising via social media platforms, text messages, direct phone calls, or online advertisements.
Licensed moneylenders can only advertise through business or consumer directories (in print or online), websites belonging to the moneylender, and advertisement placed within or on the exterior of their approved place of business. They are also not allowed to solicit loan transactions through social media platforms, text messages, emails or flyers. Besides, they must meet the borrower in person for verification of identity before granting the loan.
They are regulated
Licensed moneylenders are required to give their clients a written contract with all the details of the loan. This includes interest rates, late repayment fees and other charges. It is important to check that the loan contract is in adherence with the Ministry of Law’s regulations. If the agency is unwilling to do so, you should avoid it at all costs.
In addition to the Ministry of Law’s rules, a reputable licensed moneylender will not engage in unsavory practices. For instance, they cannot affix posters, placards or bills on your property, nor write profanities or slogans on your car. You can also report them to the Ministry of Law if they do so.
Furthermore, a licensed moneylender is not allowed to charge more than 55% of your TDSR for loans related to the purchase of HDB and EC properties. This cap is in place to prevent the exploitation of vulnerable borrowers. This rule is strictly enforced by the Ministry of Law.
They are a viable alternative to traditional banks
Licensed moneylenders offer fast and convenient loan application processes and can help you meet your financial needs. However, they should be used only when you can abide by the contractual terms and pay the loan back on time. In addition, you should compare rates from different companies to ensure that you’re not paying too much for your money. Borrowers must also avoid loan sharks, which charge exorbitant interest rates and harass borrowers.
Unlike banks, licensed moneylenders are more flexible in their approval procedures and can accommodate those who have poor credit ratings. They also tend to be more transparent in their terms and conditions, so you can be sure of what you’re getting into. For instance, they are not allowed to contact your family or employer, or send you hate mail. They can also not loiter around your place or rummage through your car. These practices are against the law and are best avoided. Instead, you should consider other alternatives, such as financial assistance schemes offered by government agencies.
They are a critical service
Licensed moneylenders offer critical financial services to borrowers, especially in times of crisis. They are subject to rigorous licensing procedures, and are required to adhere to established rules regarding interest rates, debt collection practices, and loan terms.
Moreover, they must display their license prominently at their place of business. In addition, they must meet borrowers in person and conduct face-to-face verification before they can loan them money. This is a crucial safeguard against unlicensed lenders who often use high-pressure sales tactics.
Unlike banks, licensed moneylenders typically have quick loan approval processes and flexible repayment terms. They also charge low interest rates and fees. Some even have special loans for people who have been denied by other lenders. They can also help you find the best deal on a new home or car, and give you tips to save money on utility bills. They may also provide other products and services, such as mortgages and credit cards.